Some housing bubble news from Wall Street and Washington. Bloomberg, "Hovnanian Enterprises Inc., the sixth- largest U.S. homebuilder by revenue, reported a loss for the fiscal first quarter as sales slumped and Florida homebuyers canceled orders. It was the second consecutive quarterly loss for the company after nine years of gains."

"Homebuilders such as Hovnanian are struggling as inventories of unsold properties swell while speculators, who propelled the five-year home boom in places like Florida, cancel contracts and drop out of the market."

"'Once the housing market bottoms out, we are not expecting a rapid recovery,' Chief Executive Officer Ara Hovnanian said."

"'Builders like Hovnanian got blindsided,' said analyst Alex Barron. 'There was a frenzy of buying and selling that caused prices to rise dramatically, as much as 30 percent a year in Florida at the peak. Now it seems the homebuilders got caught selling to speculators.'"

"The company wrote down $93 million in the quarter on plummeting home prices and a growing inventory of unsold houses in the Fort Myers-Cape Coral area of Florida, Hovnanian said. When Hovnanian bought First Home Builders of Florida in August 2005, every house that came on the market in Fort Myers and Cape Coral sold immediately, Hovnanian said."

"'We made that acquisition an hour and a half from the market peak,' Hovnanian told the conference on March 6. Within 18 months, the number of homes for sale in the area went from 2,000 to 22,000, he said. As a result, home prices in Cape Coral and Fort Myers, Florida, slid 12 percent to $258,900 from $293,100 a year ago, according to the National Association of Realtors."

"'Buyers are afraid to buy and a ton of people in Florida canceled,' Barron said. 'So you're at a standstill. A number of builders experienced negative sales -- cancellations exceeded the number of homes bought.'"

From MarketWatch. "New Century Financial Corp. said late Thursday that it has stopped accepting loan applications because some of the subprime-mortgage specialist's financial backers are refusing to provide access to financing."

"New Century also said that it has received $150 million worth of margin calls from its so-called warehouse lenders. It has satisfied about $80 million of those calls, but $70 million remains, according to the company."

"'As a result of the current constrained funding capacity, the company has elected to cease accepting loan applications from prospective borrowers effective immediately,' New Century said in a statement. 'The company expects to resume accepting applications as soon as practicable; however, there can be no assurance that the company will be able to resume accepting applications,' it added."

"'Once you get hit with one of these crunches, warehouse lenders don't want to lend to you, so you're really done,' said Joseph Mason, associate professor of finance at Drexel University and a visiting scholar at the Federal Deposit Insurance Corp."

"'These firms that rely on funding mechanisms like securitizations are like sharks -- if they stop moving they die,' Mason added."

The New York Times. "New Century estimates that it lost money for the six months that ended in December but it has yet to release detailed financial statements."

"'New Century is at the center of the subprime storm,' said analyst Matthew Howlett. 'Bankruptcy is not an extreme outcome here. They are in a tremendous liquidity crunch.'"

"The company said yesterday that it had significantly tightened its lending standards in the last few months and was no longer allowing borrowers to take out loans without putting any money down."

"Recent dealings in shares of Fieldstone Investment Corp. suggests that the subprime lender's agreement to be acquired by Credit-Based Asset Servicing and Securitization LLC could be renegotiated lower or even called off, analysts said this week."

"'Given the deteriorating condition of the subprime sector recently, investors fear that C-Bass may try to negotiate a lower price or back out of the deal,' Scott Valentin, an analyst at Friedman Billings Ramsey, said on Tuesday."

"The main concern is that Fieldstone may be forced to repurchase some loans that it previously sold on to other investors, according to Valentin. 'The wild card is the early-payment default issue,' Valentin said. 'If Fieldstone saw a material increase in loan repurchases, that would cut the value of their loan portfolio and could give C-Bass an excuse to withdraw.'"

The Pioneer Press. "At its peak Maribella Mortgage had 125 employees, operations in Chicago and Milwaukee and investors eager for the subprime mortgages it bundled together at $20 million to $50 million a pop."

"Maribella's Edina headquarters are empty now but for three remaining employees. The company officially shuts down March 15, the latest casualty of escalating turmoil in the $1.36 trillion subprime mortgage market as rising defaults, weakening home prices and a get-tough approach by investors hammer the industry."

"'I never thought it would get to this,' said Mark Kiewiet, Maribella's executive vice president of operations. 'If we got through the fog, I figured we'd be fine.'"

"'The whole industry has imploded,' said Maribella co-founder Keith White."

"White said Maribella was crushed by rising buyback requests that began in late 2005 and just got worse. People defaulting on loans early was the prime culprit, White said. White blames poor loan servicing by other companies for the early defaults on about half of the loans he was asked to buy back."

"White said Maribella employees who bought home loans from mortgage brokers diligently checked documents for fraud. Nonetheless, people lied about incomes and inflated home values. He estimates that about 5 percent of his buybacks involved some kind of fraud."

"'If there was fraud, we were a victim,' he said."

"Other small traditional prime lenders may go by the wayside as the restrictions shrink the pool of potential buyers, he said. 'A day doesn't go by that I don't get guideline restrictions from investors,' White said. 'Products are going away every single day.'"

"Federal Reserve Chairman Ben Bernanke and other policy makers were warned that rising mortgage foreclosures are likely to get worse, as the central bank reported the slowest pace of loan growth in four years."

"'We have found neighborhoods with abandoned homes, 200 at a shot,' said Louise Gissendaner, director of community development in Cleveland at Fifth Third Bancorp, the 10th-biggest U.S. bank by assets. She said abandoned housing has 'devastated our city to a great degree.'"

"Consumer advocates at today's meeting said poor underwriting standards in the subprime market were behind the rising foreclosure rates. 'We are facing a foreclosure crisis in this country,' said Stella Adams. 'There is a distinct problem in the subprime market that is contributing to the foreclosures.'"

"While several council members painted an ominous picture of the future, they offered praise for recent guidance from federal banking regulators that could result in fewer borrowers qualifying for subprime loans."

"The proposed guidance, issued last Thursday, would instruct lenders to be more conservative when underwriting certain adjustable-rate mortgages. At the time, regulators predicted their proposed guidelines would likely 'result in fewer borrowers qualifying for the type of subprime loans' that they are targeting."

"Mark Metz, a member of the council and senior VP at Wachovia Corp., said 'it's very hard to argue with a lot of the guidance.'"

From Business Week. "The 2/28s now coming up for their first reset were made in early 2005. It seems crazy now, but when the loans were made, nobody worried much about the reset. But home values today are flat or falling. What's worse for many subprime borrowers, the escape route of refinancing at long-term rates is pretty much sealed off."

"Regulators allowed this problem to develop and only now are cracking down."

"Chances are the Fed will stay hawkish on inflation in spite of the harm to weak borrowers. Says Mark Gertler, a New York University economist: 'I don't think the Fed is going to base monetary policy on distributional considerations. Once the Fed loses its focus on maintaining price stability, all hell could break loose.'"

"Americans continued to load up on mortgage debt last year, even though the housing market was stalling, according to data released on Thursday by the Federal Reserve."

"Owners’ equity as a share of the total value of their property edged down to 53.1 percent at the end of 2006, from 54.4 percent in the fourth quarter of 2005. Homeowner equity was almost 58 percent of housing value in 2000, and nearly 70 percent in the 1980s."

"Rising mortgage defaults by subprime borrowers may add more than 500,000 homes to a residential real estate market already beset by slumping prices."

"'We estimate that the effect of looser lending standards could translate into another 533,000 homes coming onto the market as borrowers default -- an unwelcome phenomenon given the existing supply surplus,' Sarah Rowin and Frank Lee of bond research firm CreditSights wrote."

"'Not only do we have a lot of supply in the new home market, the existing homes are sitting much longer on the market,' said Edie Ousley, a spokeswoman for the Florida Home Builders Association. 'That increases competition for a new home to sell.'"

"'Probably the gain in home ownership over the last four, five years, is almost entirely due to looser lending standards,' said James Fielding, a homebuilding credit analyst at Standard & Poor's in New York."

"Fielding said the number of new homes on the market also is understated because when a customer cancels a home contract that house does not go back into the inventory of unsold houses. 'There's a lot more shadow inventory out there,' Fielding said. 'It's just a quirk of the statistics. They never get recaptured.'

"Cancellation rates for new homes have surged to nearly 40 percent and that has boosted the inventory of unsold houses, said Margaret Whelan, an analyst at UBS AG."